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Coal vs. gas

With the markets for both coal and natural gas booming, land disputes between the two industries have become costlier and more contentious than ever.When gas companies drill natural gas wells through coal seams, it often causes major safety and financial problems for coal companies.Underground coal operators must keep at least 200 feet away from gas wells drilled through seams they mine. Some gas wells pass through four coal seams.Rusty Skewes, an owner of Ridge Land Co. and Concept Mining Inc. in McDowell County, said every gas well drilled through one metallurgical coal seam can cause up to $1 million in losses.A 400-foot-diameter circle inside a McDowell County coal seam 36 inches high would contain 15,072 tons of coal and rock. If 80 percent of that is recoverable coal, the operator loses 12,057 tons of metallurgical coal that sells for about $76 a ton today.“We would lose $916,377 in income because of that one gas well,” Skewes said. “And that is after all the millions we spent to develop the mine.“That also means the landowner loses $54,982 from his 6 percent leasing fee, and the state loses $45,818 in severance taxes — all because of that one well.”“We should not be nearsighted and lose the coal reserves we need for our energy and jobs.”Disputes between coal and gas companies sometimes are appealed to the state’s Shallow Gas Well Review Board.Barry Lay, the gas industry’s representative on that board, said: “We have almost always been able to negotiate settlements between the parties. But that has changed within the past couple of years. My guess is that both resources have become more valuable.“We try very hard to get both parties to come to an understanding to place wells outside areas that are going to be mined,” Lay said.A lot of advance planning goes into developing mines, Skewes said, such as where to put mine entries; how to move equipment, water and air in and out of the underground workings; and where to place belt lines.When a gas well causes a mine operator to reroute a belt line, it costs even more. “Every time we turn a belt line, it costs a minimum of $100,000 to put in a new belt head,” Skewes said. “If there are 20 gas wells in a 20-million-ton reserve, your costs would be enormous.”Today, most underground mines extract entire seams, including pulling down mine pillars, used to support the roof, when active mining withdraws from an area.
“When we pull pillars, that breaks the mountain and can cause cracks that go up at about a 30-degree angle. If a crack intersects a gas well, it could snap that pipeline and gas could then come into the mine, gob [refuse] areas or working areas,” Skewes said.Nicholas “Corky” DeMarco, head of the West Virginia Oil and Natural Gas Association, said he believes compromises can be made.“They can go to the Shallow Gas Well Review Board if they have a problem,” he said. “They can pay us for the reserves in the ground and we will gladly go away.”Skewes called the review board “a kangaroo court.”
Some coal companies, DeMarco added, encourage drilling for natural gas before mining to “degasify the coal seams.”Skewes said, “Some coal owners want to have gas bled off where there is so much methane that it impedes mining. Those gas lines run horizontal, not vertical, to the mines. But you have to have enough gas to make it economically feasible.”
DeMarco said: “We have been fighting this for time immemorial. It is all about economics. I think some of these land companies are stirring this stuff. They sold leases to gas companies at a lower value than what gas is right now.”Land companies often include language in leases stating that coal leases hold the dominant interest.Cabot Oil & Gas Corp., for example, signed leases with Pocahontas Land Corp. stating: “The mining and shipping of coal is of prime importance.” The coal reserves “under said lands are the dominant estate therein and ... the oil and gas estates therein are made servient thereto.”Officials from Cabot Gas declined to comment on the dispute, in part because of a legal action in McDowell County Circuit Court.Pocahontas Land, the West Virginia Coal Association and seven coal companies are asking for a preliminary injunction prohibiting Cabot from drilling any new wells in areas being mined.Maps of mining areas in Southern West Virginia are typically covered with red dots, each dot indicating the site of a natural gas well.“Both industries are in a boom time,” DeMarco said. “Do coal companies want the 200-foot radius they have to leave behind? Probably not.“That is why they often ask to lower it to 50 feet. In a lot of cases, it is negotiated and agreed upon. But coal companies cannot go inside 200 feet [near a gas well] until there is an agreement.”DeMarco questions suggestions that leakage from natural gas wells might have contributed to the recent Sago Mine disaster in Upshur County. “Lord only knows where the methane came from.”Skewes said, “Every site with gas wells presents additional challenges in both production and safety. We always want to stay farther away than 200 feet.“I don’t want to pillar anything near a gas well. When you mine, the ground shifts. It can snap these gas wells and put gas in the mines. That’s the thing that worries me at the end of the day.“I want to see what the investigation brings out on Sago. Rumors are there may have been a gas well involved. I don’t know if that is true. But it makes me nervous.”Mining companies are also legally responsible for damage gas drillers cause to roads, reclaimed land, streams and ponds on permitted mine sites.In Virginia, coal operators can prevent gas wells from being drilled though their coal seams, according to Nicholas C. Preservati, a Charleston lawyer representing the coal and land companies in McDowell County.“There is no such provision in West Virginia law,” Preservati said. “In Virginia, state law does not permit any wells to be built through bonded or permitted mines.”DeMarco said that if any coal company sees “a potential problem with safety, there is an appeal mechanism. If it is an inconvenience, they can buy those [gas] reserves. We will gladly sell them.“We have a permit to be on that land,” DeMarco said. “It can’t be coal’s way all the time.”To contact staff writer Paul J. Nyden, use e-mail or call 348-5164.
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